Characteristics of market
Answers
Essential characteristics of a market are as follows:
1. One commodity:
In practical life, a market is understood as a place where commodities are bought and sold at retail or wholesale price, but in economics “Market” does not refer to a particular place as such but it refers to a market for a commodity or commodities i.e., a wheat market, a tea market or a gold market and so on.
2. Area:
In economics, market does not refer only to a fixed location. It refers to the whole area or region of operation of demand and supply
3. Buyers and Sellers:
To create a market for a commodity what we need is only a group of potential sellers and potential buyers. They must be present in the market of course at different places.
4. Perfect Competition:
In the market there must be the existence of perfect competition between buyers and sellers. But the opinion of modern economist is that in the market the situation of imperfect competition also exists, therefore, the existence of both is found.
5. Business relationship between Buyers and Sellers:
For a market, there must exist perfect business relationship between buyers and sellers. They may not be physically present in the market, but the business relationship must be carried on.
6. Perfect Knowledge of the Market:
Buyers and sellers must have perfect knowledge of the market regarding the demand of the customers, regarding their habits, tastes, fashions etc.
7. One Price:
One and only one price be in existence in the market which is possible only through perfect competition and not otherwise.
8. Sound Monetary System:
Sound monetary system should be prevalent in the market, it means money exchange system, if possible, be prevalent in the market.
9. Presence of Speculators:
Presence of seculars is essential just to supply business information’s and prices prevalent in the market.
With all points written above “one price” system is the true test of the economic market.